Director of Public Prosecutions (Cth) v Silverii
[2018] VCC 1781
•31 October 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CRIMINAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CR-18-00838
| DIRECTOR OF PUBLIC PROSECUTIONS (CTH) |
| v |
| LUCA SILVERII |
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JUDGE: | HER HONOUR JUDGE CONDON | |
WHERE HELD: | Melbourne | |
DATE OF PLEA HEARING: | 14 September 2018 | |
DATE OF SENTENCE: | 31 October 2018 | |
CASE MAY BE CITED AS: | Director of Public Prosecutions (Cth) v Silverii | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 1781 | |
REASONS FOR SENTENCE
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Subject: CRIMINAL LAW
Catchwords: Sentence - plea of guilty – dishonestly obtain financial advantage by deception from a Commonwealth entity
Legislation Cited: Criminal Code (Cth), s 134.2(1), 11.1(1)
Cases Cited:DPP (Cth) v Rowson [2007] VSCA 176; Kibukamusoke v The Queen (1997) (unreported); DPP (Cth) v Phan [2016] VSCA 170
Sentence: Total effective sentence: 6 years’ imprisonment with a non-parole period
of 3 years and 6 months.
6AAA declaration: 7 years’ imprisonment with a non-parole period of 5
years
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APPEARANCES: | Counsel | Solicitors |
| For the Director of Public Prosecutions (Cth) | Mr D Sagnelli | Solicitor for the Commonwealth Office of Public Prosecutions |
| For the Accused | Mr D Dann QC with Ms L Thies | Galbally & O’Bryan |
HER HONOUR:
1
Luca Silverii, you have pleaded guilty to five charges of dishonestly obtaining a financial advantage by deception from a Commonwealth entity, contrary to
s 134.2(1) of the Criminal Code (Cth) and one charge of attempt to dishonestly obtain a financial advantage by deception from a Commonwealth entity, contrary to ss 11.11 and 134.2(1) of the Criminal Code (Cth).
2 At the time of these offences you were between 29 and 34 years of age, you are now 36 years of age.
3 Exhibit A on the plea was a Summary of Prosecution Opening. I incorporate that document as part of my Reasons for Sentence. However, I will briefly summarise your offending.
4
Throughout this offending you were the owner and manager of a medical practice, trading as the AllMed Consulting Clinic (“AllMed”), located in
Fitzroy North, Victoria. In your capacity as practice manager, you were tasked with lodging Medicare claims, allowing the business to receive from Medicare payments of benefits.
5 Between 24 December 2011 and 2 January 2017, you submitted via the Medicare online claiming system a total of 1,608 bulk-bill batches, claiming for a total of 75,232 items relating to services purportedly provided to 5,870 patients of the clinic by eight registered health providers.
6 None of the services were provided; therefore, all the claims were fraudulent, which you knew at the time of lodging. Being unaware of this at the time, Medicare processed and paid out 1,601 bulk-bill batches. The payments were directed to a bank account controlled by you. The payments amount to $3,371,033.25, which you had no entitlement to (this conduct constitutes charges 1 to 5 on the Indictment, dishonestly obtaining a financial advantage by deception from a Commonwealth entity).
7 The remaining seven bulk-bill batches were (for varying reasons) not successful. Medicare did not ultimately pay the claimed benefits of $3,621.80. You were not entitled to these benefits since the medical services were not rendered (this conduct constitutes charge 6 on the Indictment, attempting to dishonestly obtain a financial advantage by deception from a Commonwealth entity).
8
On 20 December 2016, a search warrant was executed at your Preston home and on AllMed’s trading premises in Fitzroy North. Subsequent to that, on
2 January 2017, you lodged a batch containing false claims which were ultimately not paid by Medicare. This conduct relates to the final charge on the Indictment, which is charge 6.
9 On 11 January 2017, you participated in a formal Record of Interview, wherein you made full admissions to these offences. It was a lengthy interview that went close to three hours. In the course of that interview you volunteered detailed responses as to the method deployed by you to effect the deceptions and also disclosed to investigators which batches would contain false claims.
10 The submission was made on your behalf, and accepted by the prosecution, that your full and frank admissions had real practical value in that they assisted investigators to identify the particulars of which claims were fraudulent. As at January 2017, the investigators had already amassed information which established fraudulent claims to the tune of two million dollars; the disclosures by you in the Record of Interview assisted in the discovery of further amounts previously unknown to the investigators.
11 You also expressed remorse in the Record of the Interview with the Department of Health and Human Services, saying that you were not proud of what you had done. You said that you did not feel good about it and you knew that you had done the wrong thing. You also said you hoped that somehow there was a way to repay and resolve all of the problems you had caused. You also recognised that you had breached the trust of people around you.
12 Insofar as the motive for your offending was concerned, you told the investigators that “90 per cent of [your] reason for doing it was mainly from a business point of view”[1]. You were also asked about your gambling. You had an online sports betting account and you also indicated that you played the pokies every so often, but not on a regular basis. You also said that you were, throughout the relevant period of your offending, gambling a large amount of money.
[1] ROI transcript, p 71 (p 202 Brief of Evidence)
13 However, you also said in the course of the interview that “if you have more money you’re going to make more money”[2] and you also stated that “a lot of it wasn’t – wasn’t there just to fuel my gambling”[3]. And, furthermore, you stated that “I didn’t get that money just so I could go gamble it”[4].
[2] ROI transcript, p 71 (p 202 Brief of Evidence)
[3] ROI transcript, p 71 (p 202 Brief of Evidence)
[4] ROI transcript, p 71 (p 202 Brief of Evidence)
14 Despite your answers in the Record of Interview, your Counsel submitted that the motive for the offending, being business and gambling, merged together. Whilst in the Record of Interview, you attributed 90% of your reason for engaging in this sustained fraud was to prop up the business, your Counsel submitted that your gambling equally propelled the offending.
15 Furthermore, whilst not raised in the Record of Interview, drug taking was also deemed to play a part in the motive. Apparently within six to eight months of opening the clinic, you began using drugs heavily and by 2015-2016 your drug use was at its highest. No doubt this affected your ability to make rational decisions and may well have fuelled the state of denial/avoidance referred to in Dr Daphne Smith’s psychological report.
16 The prosecution submission emphasised that yours was a fraud based on greed. The submission was made in light of the substantial amount involved here, and the reason proffered for your offending, that it was not a case of need versus greed. The prosecution contention was that ultimately, looking at the full picture, yours was offending driven by greed.
17 In response, your defence counsel conceded a measure of greed as the motive, yet balked at the suggestion that yours was a case of pure greed.
18 The following objective circumstances surrounding your offending were relied upon by the prosecution:
(a) the extraordinary quantum involved here, being in excess of $3,000,000.00;
(b) your offending was protracted in time, overall, in excess of five years;
(c) it was the result of a deliberate, sophisticated and planned scheme;
(d) it was executed solely by you;
(e)it involved an elaborate level of deception, which included you systematically covering your tracks by deleting the claims from the systems at the clinic’s end in order to avoid being detected by other staff;
(f)it involved a significant breach of trust of the doctors employed at the clinic, patients of the clinic and the community at large;
(g)the intensity of your scheme increased over time, until it reached over $1,000,000.00 defrauded in the last two years;
(h)it did not cease of your own accord;
(j)it continued after you became aware that you had been detected, as you lodged the claim on 2 January 2017, after the December 2016 search warrants had been executed.
19 In response, your defence counsel relied on a number of matters in mitigation.
These were:
(a)Your previous good character. True it is, you are a person with no prior criminal history, however your defence also accepted that this factor is not uncommon in sentencing white-collar offenders. Your counsel conceded that the relevance of good character must be tempered in cases such as this, since it is often that very factor which places a person such as yourself in a position where you are able to commit the offence.
However, I do take into account the range of character references tendered on the plea on your behalf, which describe you as hard working and trustworthy. Each of the character references resonate with the impression that your commission of these offences was, indeed, out of character, and an aberration;
(b)The level of cooperation you provided in the Record of Interview, and your counsel submitted that substantial weight should be given to the full and frank admissions made by you;
(c)Your plea of guilty and the time at which it was indicated. Charges were issued against you on 21 December 2017. On 23 April of this year, the matter resolved by way of hand-up brief at the committal mention and you entered pleas of guilty;
In the circumstances, I find that it is an early plea and one consistent with a desire to facilitate the administration of justice. Furthermore, I find that it is a plea that demonstrates contrition and remorse;
(d)Finally, it was submitted on your behalf that you have very good prospects for rehabilitation.
The matters relied upon in support of that contention were as follows:
(i) you are without prior convictions;
(ii)you are a person of excellent character, having been raised in a stable and loving family by hard-working and law-abiding parents;
(iii)you enjoy the ongoing support of a strong network of family and friends. That support was said to be manifest in the number of family and friends present on the plea to indicate their support of you;
(iv) your remorse shown for this offending;
(v) the fact that you actively sought treatment from a psychologist not long before you were interviewed by the Department of Health and Human Services and are motivated to put your mental health and general wellbeing as a priority; and
(vi) furthermore, reliance is placed on the psychological report of Dr Daphne Smith, exhibit 2 on the plea, in which it was her opinion that you have responded very well to treatment, and effectively decreased your avoidant behaviour.
20 The defence conceded that the only available disposition to me was a term of imprisonment.
21 The authorities to which I was referred by both the prosecution and defence, make it clear that it is:
“… well recognised that those who systematically defraud the public revenue of large sums of money over a substantial period should be sentenced to substantial terms of imprisonment … In cases such as this, considerations of general deterrence are given particular emphasis and indeed prominence in the sentencing process. The courts have a significant responsibility to protect the integrity of the revenue system, by imposing punishments, for deliberate and sustained fraud which are likely to deter others who may be otherwise tempted to indulge in the type of conduct committed by the respondent.”[5]
[5]DPP (Cth) v Rowson [2007] VSCA 176 at [24].
22 These observations of the Court of Appeal in DPP (Cth) v Rowson, while dealing with a fraud on the tax office, are apposite here. Or, as has been put more simply by Justice Gallop in Kibukamusoke v R: “Defrauding Medicare is really robbing other taxpayers”[6].
[6] Unreported, ACTSC, Gallop J, 17 December 1997; DPP (Cth) v Phan [2016] VSCA 170 at [63]
23 While conceding the importance of general deterrence in cases involving fraud on the Commonwealth, the submission was made on your behalf that a non-parole period that is shorter than otherwise might have been the case is justified in all the circumstances. I accept that submission in light of the evidence placed before me as to your favourable prospects for rehabilitation.
24 Support for this submission was grounded in the observations of Dr Daphne Smith, clinical psychologist. It was contended that through your consultations with her you have commenced the process of rehabilitation. Therefore, it was argued that specific deterrence may be accorded less weight than would otherwise be the case. You have seen Dr Smith on 25 occasions, commencing in November 2016, and most recently on 1 August this year. She is of the opinion that you have responded very well to treatment.
25 Furthermore, she states that at the time of the commission of these offences you were under a “tremendous amount of pressure and stress and utilized avoidance as a coping strategy in the form of gambling, drug taking and alcohol”. Indeed, on the plea I was told that around 2015 to 2016 your drug use escalated and you were regularly using two to three grams of cocaine; reflective of a drug habit that was costing you approximately $2,500.00 per week.
26 Dr Smith said that you are now fully engaged in treatment which has involved Cognitive Behavioural Therapy. She said that you have insight into your offending. Most importantly, she observed that you have decreased your avoidant behaviours, including gambling, drug taking and excessive alcohol use. According to her, you have not gambled or taken drugs since around October 2017.
27 It is clear that upon your release from custody you will have the benefit of a supportive family network. You were married in June 2017 to Natasha Primo. She was told six months before you married of the nature of your serious offending. She said that she cannot stress enough the disappointment, embarrassment and sincere regret you feel for your actions.
28 Your father, who is a pharmacist, also provided a character reference to me. He has been involved in your case since late 2016. He said that you have shown remorse, regularly discussing how you have done the wrong thing and how you have disappointed those around you. According to him you are devastated and you know that your offending will be a “permanent stain on your life’s work”. From my review of each of the character references and Dr Smith’s report, I am of the view that your prospects of rehabilitation, in all the circumstances, remain good.
29 The prosecution submitted that in your case some measure of specific deterrence was warranted given the protracted nature of the offending, the level of sophistication involved, and the fact that your offending continued after you became aware of having been detected. This final factor here does concern me somewhat.
30 Your defence counsel told me that you were at a loss to explain why you had engaged in further offending subsequent to the execution of the search warrants. He did, however, point out that the claims involved were (relative to the successful claims) of minimal amounts. He submitted to me that this conduct should not loom large insofar as my assessment into your prospects of rehabilitation are concerned and my assessment to the veracity of your remorse and contrition. Your explanation in the Record of Interview sheds some light on your state of mind at the time. You simply told the investigators that you filed the further claims after the search warrant to test the system, to see if further claims would be approved.
31 In light of the submissions made before me, I am of the view that no other sentence here is appropriate, apart from a sentence of imprisonment. I make that assessment based on the submissions made by both the prosecution and defence, the quantum of the fraud here, the length of the deception, and the authorities placed before me, to which I have already referred. I am also of the view, that some measure of cumulation is warranted given the protracted nature of the offending but am also mindful of the application of the totality principle.
32 This grave offending by you, marked by a prolonged deception and involving vast sums of money warrants condign punishment. The Medicare system is an honesty based one. Your offending strikes at the very heart of that system. As was properly conceded by defence, your offending involves a significant loss to the Commonwealth and the community at large. You have thus far made no repayments and have since been bankrupted.
33 I turn now to your personal circumstances. As already stated, you are now
36 years of age. You were born and raised in Thornbury. Your father is a chemist and you mother works as a receptionist at the Abruzzo Club in Brunswick. You have an older brother who suffers from chronic fatigue syndrome.
34 You hail from a close knit family and until 2011 you remained living in the family home in Thornbury. As already noted, you are married and have been since 2017. You have no children.
35 You completed VCE and enrolled at Monash University to study a Bachelor of Science. However, you later transferred to La Trobe and only completed one year of your degree. Halfway through your second year you deferred and never returned to study. You have an admirable work ethic having worked in various odd jobs since you were around 13 years old, including long term service as waiter at the Abruzzo Club. You worked part-time in nightclub promotions until you were about 25 years old.
36 In January 2008 you undertook to build a medical clinic on an unused car park site owned by your father. The project was initially financed by your father. However, you ultimately took out a $225,000.00 business loan, taking over the debt. You started to use small amounts from the loan on online horseracing. Apparently the business was from the outset overburdened by debt, which to some extent explains why only 15 months into its operation you began this serious offending. I note in this regard that your offending, became more serious each year, until it stabilised in the last two years of the operation of the practise.
37 The basic purposes for which a court may impose a sentence are punishment; deterrence, both specific and general; rehabilitation; denunciation and protection of the community. In sentencing you, I must have regard to a range of matters, such as the seriousness of the offending, your culpability for it, your personal circumstances and those of the victim, if any.
38 Please stand Mr Silverii.
(a) in relation to charge 1, I sentence you to a period of imprisonment of
twelve (12) months. I order that this sentence commence on 31 October 2018.
(b) in relation to charge 2, I sentence you to a period of imprisonment of
two (2) years. I order that this sentence commence on 31 October 2018.
(c) in relation to charge 3, I sentence you to a period of imprisonment of
two (2) years. I order that this sentence commence on 31 October 2019.
(d) in relation to charge 4, I sentence you to a period of imprisonment of
three (3) years. I order that this sentence commence on 31 October 2020.
(e) in relation to charge 5, I sentence you to a period of imprisonment of
three (3) years. I order that this sentence commence on 31 October 2021.
(f) in relation to charge 6, I sentence you to a period of imprisonment of
twelve (12) months . I order that this sentence commence on 31 October 2018.
It makes for a total effective sentence of six (6) years.
39 I order a period of three (3) years and six (6) months before you become eligible for parole.
40 Pursuant to s18 (4) Sentencing Act 1991 (Vic), I declare a period of 47 days as pre-sentence detention and order that such declaration be noted in the records of the Court.
41 Pursuant s21B Crimes Act 1914 (Cth), I order that you make reparation in the amount of $3,371,033.25.
42 Pursuant to s6AAA Sentencing Act, were it not for your pleas of guilty, I would have imposed a total effective sentence of seven (7) years’ imprisonment with a non-parole period of five (5) years.
43 Those are the orders. Yes, you may be seated, Mr Silverii.
44 MR SAGNELLI: As Your Honour pleases.
45 MS THIES: As Your Honour pleases.
46 HER HONOUR: Yes, are there any other further orders that are required?
47 MR SAGNELLI: No, Your Honour.
48 MS THIES: No, Your Honour.
49 MR SAGNELLI: No, Your Honour.
50 HER HONOUR: Yes, very well. Yes, we'll now adjourn till 10.30. Thank you.
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